A review of 2023 and of emerging class action trends in Québec, presented by the members of the BLG Class Actions team.
Notable case law developments in 2023
1) Automotive: Fuel consumption representations hold up before the courts
On July 31, 2023, in Duguay c. General Motors du Canada ltée, 2023 QCCS 3223, the Superior Court dismissed a class action at the merits stage involving an alleged failure to inform consumers that an electric vehicle equipped with a battery and a fuel-powered generator could consume small quantities of fuel when the car is started in cold temperatures. This decision clarified certain points relating to the burden of proof at the merits stage in respect of false representations and omissions under the Consumer Protection Act.
The Plaintiff must prove the existence of all of the requisite elements of liability in respect of each of the members of the group. The ordinary rules of evidence apply to class actions: presumptions of fact must be serious, precise and concordant. Although the plaintiff is not required to have each of the group members testify and is allowed to rely on presumptions, such presumptions must not stem from pure hypothesis, speculation, vague suspicions, or mere conjecture. In this instance, the evidence did not indicate that all the group members had a common experience with respect to the allegedly misleading representations. As regards false or misleading representations under the Consumer Protection Act, it is incumbent on the Plaintiff to prove that the group members were aware of the allegedly misleading representations prior to purchasing the vehicle.
Duguay therefore sets an important precedent. This is a landmark ruling that clarifies and details the analytical framework for the plaintiff’s burden of proof at the merits stage of a class action, in particular how presumptions of fact are applied. Most notable is the clarification that each member must have been aware of the misleading representations.
Interestingly, Duguay mirrors an Ontario Court of Appeal decision, Rebuck v. Ford Motor Company, 2023 ONCA 121, which addressed the use of regulated fuel consumption labels in marketing materials. The Ontario courts also found that, even if fuel consumption labels conveyed an impression that differed from the vehicle’s actual fuel consumption, no false representations had been made. There was not enough evidence to support the idea that a “credulous and inexperienced” consumer could not understand that the consumption achieved for the purposes of these labels did not necessarily reflect the achievable consumption in real-world driving conditions. This action was likewise dismissed.
The Duguay and Rebuck decisions both provide clarity on advertising practices in the automobile industry.
2) Homsy: Court of Appeal clarifies that applications for authorization should not be subject to a strict reading
The Homsy case is a class action brought against Google LLC dealing with illegal collection of biometric data from Google Photos users. The Superior Court dismissed the class action (Homsy c. Google, 2022 QCCS 722), but the Court of Appeal reversed this decision in 2023 in Homsy c. Google, 2023 QCCA 1220.
The action was initially dismissed in keeping with the Supreme Court’s teachings in the Infineon and Oratoire decisions, which state that vague, imprecise, or speculative allegations must be supported by some evidence to be assumed true. According to the trial judge, most of the allegations were not supported by evidence. As a result, the application was dismissed.
However, the Court of Appeal rejected this finding in a decision with concurring reasons. Justice Sansfaçon allowed the appeal for two reasons. First, one of the exhibits supporting the application for authorization originated from the defendant. It clarified how Google Photos worked, underpinning allegations that the Court of Appeal considered specific enough to be assumed true. Second, Justice Sansfaçon felt that the trial judge had not grasped the substance of the plaintiff’s main allegation, namely that biometric information had been collected without consent in violation of the Act respecting the protection of personal information in the private sector.
Additionally, Justice Morissette clarified the Supreme Court’s teachings, explaining that if the alleged facts are sufficiently clear, precise, and specific, the plaintiff does not have to provide “some evidence” in support of their allegations, and that these can be assumed true. The trial judge’s decision relies on a factual finding, which commands appellate deference.
The Homsy decision is significant as it discourages a strict reading of applications for authorization. Nevertheless, this decision raises other procedural questions. As Justice Morissette remarked, the defendant was denied leave to file relevant evidence and examine the representative plaintiff at the authorization stage, in part because the trial judge had deemed that the representative plaintiff would simply have to sink or swim with the pleading it had drafted. While a generous reading can dovetail with the authorization process, the specificity or sufficiency of an allegation necessarily depends on context and evidence, whether filed in support of the application or as relevant evidence. Over the next few years, it will be interesting to see how Homsy affects defence’s applications to file relevant evidence.
3) Authorizations and competition law: Conspiracies must be proven
In Hazan c. Micron Technology inc., 2023 QCCA 132, the Court of Appeal upheld a Superior Court judgment denying authorization to institute a class action regarding an alleged international conspiracy in the production of dynamic random-access memory (DRAM) chips. Among other things, the Court of Appeal clarified the application of the colour of right criterion in the specific context of a competition law class action.
Some evidence is required in competition law class actions. Bare allegations of a conspiracy are insufficient and must be supported by evidence. The teachings in Infineon are clear: “mere assertions are insufficient without some form of factual underpinning” (para. 134). This requirement applies for all the elements of the alleged cause of action, including the existence of an agreement between the respondents.
Relying on Infineon, the trial judge found that the documents filed by the applicant did not constitute “some evidence,” noting that some exhibits contradicted the allegations in the Application for Authorization to Institute a Class Action. These documents included articles about a conspiracy investigation by the Chinese authorities which did not yield any report or conclusion regarding the existence of a conspiracy by the respondents nor found any kind of anti-competitive practice. The Court of Appeal concurred with the trial judge’s assessment and conclusions in this regard. Moreover, if the applicant had personal knowledge as to the existence of a conspiracy, he may have been exempted from having to support his allegations with evidence. Yet the applicant had no such personal knowledge. Exercising his discretion, the judge rightly determined that none of the evidence supported the applicant’s general and imprecise allegations.
This decision will have a big impact on how applications for authorization to institute a class action are handled, especially in competition law. This is the first decision since Infineon wholly denying authorization to institute a class action regarding an alleged conspiracy due to lack of sufficient evidence. It confirms that applicants may not make mere allegations unsupported by evidence and must make a prima facie showing of the alleged conspiracy. This decision may deter applicants from trying to institute competition law class actions in situations where public authorities failed to find a conspiracy justifying sanctions or found no grounds for investigation.
4) Class counsel fees: Court of Appeal lays down guidelines
On April 24, 2023, in A.B. c. Clercs de Saint-Viateur du Canada, 2023 QCCA 527, the Court of Appeal clarified the relevant analytical framework for assessing class action counsel fees. The trial judge had refused to approve the settlement agreement presented by the defendant, mainly due to the class counsel fees claimed for the suit, which he found excessive. The Court of Appeal overturned this ruling.
The Court of Appeal found that the trial judge’s refusal to approve the settlement due to fees was unjustified, as the agreement contained a clause allowing the matter of fees to be addressed independently. With the help of an amicus curiae, the Court of Appeal developed an analytical framework for fee approval.
The Court of Appeal underscored certain principles:
- The analytical framework is based on article 102 of the Code of Professional Conduct of Lawyers, but those factors are not exhaustive and must be considered in context.
- The risk incurred by class counsel must be assessed at the time counsel received the mandate, not at the time of the application for approval.
- Judges should consider how the agreement and claimed fees affect the image of the profession. Per article 7 of the Code of Professional Conduct for Lawyers, the agreement must not give a profit-seeking character to the profession. Importantly, however, percentage agreements are common with class actions and enable freer access to justice.
- Professional fees amounting to between 15 and 33 per cent of a settlement fund are common but not assumed. Fees should be set based on an assessment of the work actually performed.
- The lodestar method for calculation helps keep fees reasonable, but it isn’t determinative and can be somewhat arbitrary.
- Fee agreements enjoy a presumption of validity.
Using these principles, the Court of Appeal proposed that an application for approval should be analyzed as follows:
- The criteria set out in the Code of Professional Conduct for Lawyers should be applied and the risk assumed by counsel taken into account.
- If the amount (rather than the percentage) of the payable fees is reasonable, the judge may decide to conclude the analysis.
- However, if the fee total seems unreasonable, a multiplication factor must be applied to the hours spent on the case to produce a reasonable fee total.
This Court of Appeal analysis provides useful and timely clarifications on how to approve class action counsel fees. Note, however, that this analysis is highly contextual and may result in court debate.
5) The Tessier ruling and the absence of prejudice
In Tessier c. Economical, compagnie mutuelle d'assurance, 2023 QCCA 688, the Court of Appeal upheld the dismissal of an application for authorization to institute a class action against various insurance companies. The application alleged a failure to disclose the existence of agreements with contractors in the insurance companies’ network relating to work discounts in the event of a disaster.
After analyzing the allegations, the Court of Appeal confirmed that the existence of the agreements at issue had no demonstrable negative impact. After analyzing the application for authorization, the Court underscored that “[TRANSLATION] this entire matter is based on intuition or contingencies” that cannot be considered proven.
Moreover, the Court of Appeal noted that a court must examine the criterion of an arguable case from the standpoint of the representative plaintiff’s personal right of action. Yet in this case the appellant was compensated and his insurer satisfied all claims against him. The plaintiff’s argument relied on the idea that the existence of agreements between business owners and insurance providers should have reduced insurance premiums, or otherwise affected payable compensation. The Court did not uphold this syllogism. Without a personal cause of action, and given that he was compensated per his policy’s terms, the appellant had no recourse against his insurer. As a result, the application for authorization was dismissed for the entire class.
In this ruling, the Court of Appeal highlights a key principle of class actions: the representative plaintiff must have a viable personal cause of action. It is not sufficient for some hypothetical member to have a cause of action, or for the proposed syllogism to be tenable in the abstract. The proposed syllogism must relate to the representative plaintiff’s situation and have a factual basis. Otherwise, courts can verge dangerously close on commissions of inquiry, which goes against the purpose of a class action procedure. In Tessier, the Court of Appeal urges applicants to refrain from such fishing expeditions.
BLG bulletins and other publications
Business interruption losses and COVID-19: What is the situation in Québec in 2024?: Update on business interruption loss claims. Read BLG’s case comment.
Hazan c. Micron Technology inc., 2023 QCCA 132: the Court of Appeal denies authorization to institute a competition law class action. Read BLG’s case comment.
Duguay c. General Motors du Canada ltée, 2023 QCCS 3223: Superior Court clarifies the plaintiff’s burden of proof at the merits stage of a class action lawsuit. Read BLG’s case comment.
Tessier c. Economical, compagnie mutuelle d'assurance, 2023 QCCA 688: The Court of Appeal refuses to authorize an insurance-related class action. Read BLG’s case comment.
Anne Merminod, Stéphane Pitre, Alexandra Hebert, and Véronique Faucher-Lefebvre, “La nécessité d’établir la connaissance des représentations fausses ou trompeuses en droit de la consommation : perspectives au Québec et Canada”, Barreau du Québec, Développements récents au Québec, au Canada et aux États-Unis, vol. 544, 2023 (available at La Référence).
Outlook for 2024
1) Air Canada, Expedia and section 224(c) CPA
In 2024, courts will hear at least two cases on the merits regarding section 224(c) of the Consumer Protection Act. Section 224(c) provides that a business cannot charge a higher price than advertised, and that this price must include the taxes and fees the consumer has to pay to obtain the goods. It has been frequently relied on in recent years.
Applying this clause can be challenging when merchants are able to charge additional fees during a transaction, as is often the case with air travel and hotel reservations. Recently, the Superior Court rejected a class action brought against Expedia (Lussier c. Expedia inc., 2024 QCCS 472) involving hotels that charged additional fees without adequately disclosing them. This decision has yet to be appealed, but in the meantime, the Court of Appeal will have the opportunity to rule on a similar matter in Union des consommateurs c. Air Canada, a class action likewise dismissed on the merits involving certain regulatory fees not disclosed at the outset. These cases may have significant repercussions for price disclosure practices in consumer law.
2) Surge in cases on use of data and privacy
Though some data loss and breach cases (e.g., Lamoureux c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2023 QCCA 1460; Del Giudice v. Thompson, 2024 ONCA 70; Owsianik v. Equifax Canada Co., 2022 ONCA 813) were met with skepticism by Canadian courts, questions around data use and consent to the collection of personal information will be the crux of new class actions.
After Homsy was authorized by the Court of Appeal, similar cases, such as Elgadi c. WhatsApp, Penso c. Home Depot of Canada Inc., and Hogue c. Société canadienne des postes are following in its footsteps, and those of Option Consommateurs c. Flo Health Inc., 2022 QCCS 4442. They raise privacy issues, but also issues pertaining to consumer law, including representations regarding data management. With a new regime now in force in Québec, these will surely be cases to watch.
3) MacDuff c. Vacances Sunwing inc.: Court of Appeal to rule on judges’ discretion in approving professional fees
In MacDuff, the trial judge approved the parties’ settlement agreement, but made payment of part of the class counsel fee dependent on claim rate. Of the $1.5 million claimed by counsel, the judge ruled that the fees actually incurred (approximately $751,450) would be payable upon approval of the settlement, but that the balance could only be paid if a claim rate of 10 per cent was achieved. The claim rate had initially been set to 50 per cent, but was lowered following an application for revocation of judgment. The Court of Appeal will thus have the opportunity to rule on the discretionary powers judges have when approving class action settlement agreements, and the measures they can take to ensure class counsel fees are reasonable in view of the compensation received by class members.
4) Business interruption: Is the end in sight for COVID-19 cases?
In 2024, the courts ruled on several business interruption claims related to the pandemic. Several actions have already been dismissed. The Ontario Court of Appeal upheld the dismissal of Workman Optometry Professional Corporation v. Certas Home and Auto Insurance Company, wherein the trial judge notably decided that neither COVID-19 nor COVID-related government ordinances were responsible for the physical loss compensated by the insurance policy at issue. Similar claims will also be heard in Québec. It will be interesting to see how those decisions may differ from Centre de santé dentaire Gendron Delisle inc. c. La Personnelle, assurances générales inc., which dismissed the dentists’ claims at authorization subject to the conditions and details of the policies.
Contact us
For any questions about the topics covered in this review or to learn more about how BLG can advise you, please contact one of our Montréal office Class Actions team members listed below.
